Why do most startups almost lose the whole team before they rebuild themselves?

Change Management: Story War (Photo credit: daveelf)

Short Answer: What took you here, won’t take you there. Priorities change, People change, Expectations change. Hence Change becomes a must :)

Longer Answer: Based on my experience with startups (that I have tried to build, and the ones where I have worked so far), I have sensed this behavior of moving on very common (including my decision to move on from the ones I worked for). Now, when I look back at those people and myself who moved on, I can figure out some common traits and triggers for this outcome.

In the formative years of any start-up, when the hierarchy is still away from the organization and team members stand at a common ground sharing the sweet smell of sweat in bringing opportunity for the company. Everyone in the team sharing the ground has something in common – They all have their personal ambitions in their mind, and they are hopeful to achieve it in some time frame. The fresher in the team might be delaying his car purchase, the other guy might be postponing his marriage plans, the senior guys might be looking out their dream houses and delaying it for the big day of their startup lives, The wanna-be entrepreneur might be looking out to start his own venture soon, and the very senior ones might be waiting to become the next big venture capitalists. And almost all of them have been putting their personal lives at the back seat, hoping that this startup would give them enough to be able to spend quality time with their near and dear ones later.

[Point to be noted here is that – A startup is a group of people who are ambitious (in their own unique way ), and are ready to the pay the price of their ambitions by waiting for the good days. All these people value their ambitions more than the startup, they all take up the startup job because this is the route to materialize their ambitions later.]

Once the basic structure of the team and business model gets formalized, a soft-line hierarchy creeps into the system and no one minds it at this point of time. People strive hard to achieve the common organizational goals instead of wasting time over thinking about hierarchy. The basic goal of the company is still survival and meeting its expenses.

The moment business has a proof of concept and is able to meet its running expenses, the goals start to change and then the founders start thinking of taking a leap ahead and change gears. This is the most crucial moment for the organization (externally as well internally). This is the situation when the company has to internally prepare the team to take up roles in a defined manner and set a hierarchy, and at the same time meet the market expectations.

Team members (most of them) hate this change, either because they will not get the desired role or will not have enough intrinsic motivation (because it won’t lead them to the dream they have about their near future) to play the role they are being offered. New people too join the team, and they join at different roles and positions which may or may not be acceptable to the existing team members. All in all, this is one of those volatile moments for an organization trying to scale up in the market while facing a threat of huge human resource risk internally.

I have seen people moving out at this juncture (I myself have moved out several times), and the core reason I can feel is that – In the wake of scaling up, normally startups forget to assign roles properly and fail to manage the human expectations (financial, professional, etc) of the team members. And this acts as a trigger point for the employees to evaluate their future goals for which they had joined this startup.

And eventually, an employee decides to move on!

Point to note – Employees, are after all people who are chasing their personal goals. They know what is best for them, however hard the organization might try to explain the greater common good. And when they don’t see the same happening they leave. And the trigger points are those where the company starts to act as two different people – One for serving the market, and the other one which speaks and creates stakeholders inside the organization. Often then is a mismatch between the two, and hence there is an unmet demand somewhere – either inside the organization or outside in the market. A company can not escape this situation – Either the employees will leave the organization, or customers would leave the organization. Tricky Situation to handle! :) ]

I wrote this post for one of the questions initiated by (@vijayanands ) at Quora, you can read the original post here.

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